How to Shape Organizational Innovation

American corporate culture loves the idea of innovation. Most business leaders point to companies like Tesla or GM when asked to give an example of a true innovative leader. A company that’s pushing the edge at all times and improving upon what’s possible is to be admired. However, innovation extends beyond large investments in research and development. The pace of modern business dictates that innovation is needed every day. The rise of technologies such as artificial intelligence, advanced robotics, and collaborative connected platforms disrupt organizational business platforms. Competitors are constantly challenging the status quo. The operation of organizations is affected by national and global events. One thing is for certain change is coming for big and small organizations. How does an organization foster innovation? The answer may be surprising. Amidst all the complex details that shape an organization’s relationship to innovation, such as the environment and talent, the biggest influencer is culture.

Is organizational innovation about originality? The practice of innovation is not just about coming up with something new. In fact, true innovation is about the ability to use those ideas in a product or service. Looking at the big picture, an organization can approach innovation in one of two ways. It can view innovation as an opportunity for growth. For example, using new technologies or different processes would enable the organization to do more such as grow the market share. On the other hand, an organization can look at what would happen to its market share if it remained stagnant. For an organization to execute an effective innovation strategy both points of view need to be considered.

When an organization is ready to become more innovative, research has shown that there are a few best practices. First, a key practice is to nurture an environment where permission is given to experiment, fail, and learn as well as to challenge assumptions. This is a healthy incubator for progress. When employees are given the permission to fail that does not mean to go ahead and succeed weakly. An organization needs to foster honest conversations around innovation. The expectations of deadlines on a new project can lead to employees rushing and falling back on predictable ways of doing things. For management to avoid the trap of predictability, employees should be allowed to play and be cut some slack with the understanding that there will be a dip in productivity.

The second element of successful innovation is to cultivate talent. Practices such as implementing training and development programs for innovation, building diverse teams of employees, and setting innovation performance objectives are key. Research shows that having a diverse team of different backgrounds, experiences, and perspective is more conducive to the development of new ideas. When setting and managing performance objectives, it is helpful to keep in mind one of the most important concepts of innovation practice. An organization which makes incremental innovations, each one “building on an organizationally-embedded knowledge base” is more successful. This is a practice taken from Japanese companies who are known for excellence in innovation.

An organization can have great resources and talent yet fail at innovation. The biggest threat to stagnation is the organizational culture. According to a 2016 Gartner Financial Services Innovation Survey, “the biggest threat to innovation is internal politics and an organizational culture which doesn’t accept failure, doesn’t accept ideas from outside, and/or cannot change.” Often, the problem lies with the leadership who have a difficult time with recognizing their own limited beliefs and psychological barriers to change. Leaders don’t know what they don’t know and an organization is only as agile as its leadership. In order, for organizations to overcome these limitations, organizations need to embrace the challenges and see the problems surrounding innovation as opportunity.

An organization can embrace change by improving the dialogue between its team and innovation. It all starts with awareness. The team should have a common framework around the concept. What is innovation? What isn’t innovation? Why is it important to the organization? Honest and open dialogue should be encouraged. People should be comfortable in sharing their true feelings and have a space where they can engage in open dialogue with their team. This reinforces the necessary practices for innovation. The culture must strive to question the status quo. Why are things done the way they are done? Many people fall into a “set of rules” in the job, never questioning or thinking why those rules are there. Change can be uncomfortable, and its only when the organizational culture pushes itself to the edge of the competition that true innovation is born.

As the old adage goes, “the only thing constant is change”. The landscape of modern business has made the practice of innovation a requirement, not an option in doing business. Innovation giants like GM and Tesla are trailblazing the way leaving the rest of the organizations with the dilemma of innovate or die. Whether, an organization wants to develop new ideas to increase its market share or needs to dominate the competitors, there are organizational best practices for innovation. An environment conducive to change, where play time and failure is encouraged and a diverse talent pool motivated by incremental performance objectives are favorable to innovation. Finally, the biggest threat to the implementation of new ideas in an organization is culture. Leadership that is not willing to embrace change, lack of awareness about the true meaning of innovation in the organization, and the pervasive problem of seeing the need for innovation as a problem not an opportunity. When leadership overcomes its limiting beliefs about progress and the culture nurtures open and honest dialogue among employees- the organization begins to change. Change is not easy nor comfortable neither for the individual nor for an organization. Therefore, true organizational innovation is born in an open culture with diverse talent and open minds.